Backing a founder/idea without an MVP 💭

Andreessen Horowitz's Marc Andreessen explained why he backed Adam Neumann's residential real estate idea, Flow. Read my quick summary about this decision and company on Twitter.

This inspired me to share some thoughts on MVP/product-less businesses founded solely on ideas.

In working on who raised?, I have the unique opportunity to assess the companies that have received funding recently. It is so much easier to understand the value of companies where they have an MVP or a demo available on their site.

When MVP-less ideas receive astronomical amounts of funding based on sky-high valuations, where does the justification come from?

In looking to the problem that the business is aiming to solve for, we can see the potential for its value.

• With Flow, the housing crisis is the problem they are aiming to solve for - without further explanation, we can see the potential for a high valuation and funding amount for such a business.

However, there is no value in an idea without good execution. a16z's bet on Adam Neumann is based on him having successfully established WeWork. Despite the company's IPO not going well, it is fair to state that WeWork revolutionised the workplace for a significant amount of people.

Leveraging a founder's past execution as a proxy for execution on a later idea of theirs is a risk, especially when the founder is only one of the many factors that can lead to a business making it or breaking it.

One of the significant points that VCs rely on in their investment decisions is the person they're investing in rather than simply the idea.

I don't know Adam Neumann at all, let alone well enough to evaluate a16z's bet on him as a founder, but one point I will make is he has likely learned a lot from his experience with WeWork. That's the benefit of going through immense success and failure.

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